In this environment, shipping delays are hardly surprising. The Commerce Department reported last week that imports into the United States surged by almost 21 percent last year. No wonder that the volume of goods arriving at the port of Los Angeles hit record levels in 2021 — as did delays in unloading all the additional ships.
This is not to say that the current situation was easily foreseeable. While some economists warned of looming inflation, few anticipated the shift in spending and its effects. Also unexpected was the “Great Resignation,” the rise in people voluntarily leaving their jobs, as well as the decision by several million Americans to return to the labor force slowly or not at all as the pandemic waned.
The Great Resignation has created shortages of a different kind — labor shortages — in the service sector, both for businesses for which demand remains mixed (like restaurants) and those for which demand has increased during the pandemic (just try to get a plumber or an electrician to show up at your house). As a result, inflation in service prices, while more moderate than those in goods, remains higher than the Federal Reserve’s target of 2 percent.
Note to Mr. Biden: You can’t blame clogged ports for that.
What to do about all these shortages? Here again, Mr. Biden was misleading in his conversation with Mr. Holt. “We got Intel to come in and provide $20 billion to build a new facility,” he said, referring to a recent announcement by the chip manufacturer of a new semiconductor plant to come in Ohio.
Winning that new plant was a great accomplishment. But it’s not a solution to today’s problems; the plant isn’t scheduled to turn out its first chip until 2025.
The real solution is more complicated. Some shortages will ebb naturally on their own, as consumers, having sated their thirst for adding that extra room on their house, return to more normal spending patterns. Other shortages will take longer to moderate and will require robust action, particularly by the Federal Reserve.
For its part, the White House needs to be more honest as it rolls out initiatives. It has promised robust antitrust enforcement, but while that is long overdue, it will have no discernible impact on competition or prices for years. And the high prices of meat and hearing aids, both of which Mr. Biden has vowed to address, are not at the heart of the current problem.
